"BEWARE of Greeks bearing gifts." Virgil’s Aeneid tells the story of the wooden horse of Troy, used by the Greeks to trick their way into the city.

The phrase is a modern version of the earlier translation of “Do not trust the horse, Trojans. Whatever it is, I fear the Greeks even when they brings gifts”.

The Trojan War had gone on for ten years, a lot longer than perhaps the realisation that modern Greece was in a rather parlous financial position.

Greece last week launched 15 billion euro ten-year highyield bond “gifts” to international investors, to refinance debt due to be paid up, postponing eventual payment to a later date.

At the same time, austerity measures to curb the deficit have been announced.

It is not all just cuts though, as taxes have been increased on high-value property, fuel, alcohol and tobacco and VAT has been increased.

While not exactly comparable, the UK is the next highest debtor on a debt-to-gross-domesticproduct (GDP) measure, more so than Portugal, Spain and Italy. It is entirely possible, therefore, that if Greece is on the way to being fixed, then the next target of the bond vigilantes is the UK.

While the ancient Greeks had the warrior Achilles as their trump card, the UK has the Bank of England’s buying power in supporting UK Government bonds.

Where they might not intervene, however, is the currency, where the pound has tracked the euro lower against the dollar.

While the UK Government seems to be in a state of paralysis in tackling the deficit, concentrating on the forthcoming General Election, sterling could come under further attack.

It is somewhat ironic that the Government was pushing banks to recapitalise at their biggest stress points, while appearing relaxed about their own need to rein in spending in excess of tax receipts.

Growth forecasts for the US far exceed those for the UK, so on this basis the US could start raising interest rates before the UK does the same. In that case, the dollar would appreciate further against sterling.

There is a question of whether or not this is a big issue. Dollar earners, companies with significant revenues in US or equivalent currencies, would benefit.

Conversely, companies where imports are a significant factor could suffer, on translation to sterling costs.

Last week, the Bank of England kept base interest rates at 0.5 per cent for a further month.

It would appear clear that UK interest rates are unlikely to be changed until GDP growth picks up significantly.

Under this backdrop, cash savings will actually lose value against inflation, so equities as risk assets remain the choice investment.

The FTSE 100 has gained further ground in the past fortnight, and in the past month has risen ten per cent, more than clawing back the falls in the second half of January, to remain higher on the 2010 year.

Returning to Troy, I feel obliged to point out that the film version wrongly conveys the sequence of events.

It was important for Hollywood that Brad Pitt had a role inside the gift horse as Achilles. In actual fact, Achilles had been killed some time before by Paris – and you know the rest – by an arrow through the heel.